Ocado Full Year Results: What The Analysts Said

By Steve Wynne-Jones
Share this article
Ocado Full Year Results: What The Analysts Said

Ocado published its full-year results for 2018 yesterday, with the business posting a 12.3% increase in group revenue to £1.6 billion (€1.82 billion).

Commenting on its performance, chief executive Tim Steiner said, "Creating future value now will involve us continuing to scale the business, enhancing our platform, enabling our UK retail business to take advantage of all its opportunities for growth, and innovating for the future."

Here's how leading retail analysts saw its performance:

Patrick O'Brien, GlobalData

"Ocado results show a company on track, despite being loss-making. It has remarkably consistent revenue growth on the retail side, up 12.0% to £1,475.8m for the year. Its growth continues to outstrip the online food & grocery market, which grew at 9.3% last year, and is rapidly catching up with its larger rivals.

"It’s growing twice as fast as Sainsbury’s online, and way faster than the online market leader, Tesco, which grew just 2.6% in its last quarter. In terms of online market share, Ocado is in fourth place but could overtake Sainsbury’s in the next year. While it gave very wide guidance parameters for the current financial year of 10-15% growth, even the lowest part of this range will see it continue to increase market share."


Fiona Cincotta,

​"Ocado has posted deeper losses than the market was expecting and anyone hoping for it to swing into the black this year could be left disappointed.There's also no news from management on a potential tie-up with Marks & Spencer, which could be seen as a negative by investors hopeful of a deal. The investment case for Ocado still looks compelling, though, thanks to the knock-out deals it's already signed with the likes of Kroger in the US.

"The growth outlook for the online grocery market is undoubtedly positive, as customers ditch shopping trips and trolleys for the convenience of point and click. But with Ocado shares trading at stratospherically high multiples, each earnings miss will test investor nerves."

Russ Mould, AJ Bell

“Ocado says its growth story is only just beginning but is that simply an excuse for not making a profit? Despite all the fanfare about signing international deals, the reality is that its earnings status is actually getting worse.

“The company has guided for a further decline in underlying earnings because it will incur costs of setting up customer fulfilment centres but they won’t become operational in 2019. To its credit, Ocado has made clear progress strategically with finding overseas players who want to use its technology. But when you are a FTSE 100 company, failing to make a profit is unacceptable.


“Ocado needs to spell out how material these overseas contracts are going to be to its earnings if it is to win over the army of sceptics.”

Catherine Shuttleworth, Savvy

“Sales growth from Ocado is positive news as more shoppers look for an online grocery solution supporting the on going shopper demand for convenience. Their route to profitable growth will be in markets outside of the UK and will be reliant upon selling the platform to more retailers with greater reach.

"The ongoing rumours about a deal of some kind with Marks and Spencer will no doubt heat up as the deadline on the Waitrose contract looms large at the end of March.”

Bruno Monteyne, Bernstein Research

"The Retail business reported £82.5m of EBITDA. That was lower than we expected (£88.8m), with almost all of that being explained by higher CFC costs, driven by the opening of Erith and GMDC2 in H2, as well as higher engineering costs from a greater mix of new facilities at Andover and Erith. Whilst UPH of ~165 in H2 was in line with our expectations, the DPV economics looked far better: DPV of ~199 in H2 (est: 190). Ocado expect further growth in Retail EBITDA, and revenue growth of 10-15% next year.


"Revenue from supplier income remains an increasingly important part of the Retail business, increasing from 3.6% of Retail revenue last year, to 3.9% this year."

© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.


Get the week's top grocery retail news

The most important stories from European grocery retail direct to your inbox every Thursday

Processing your request...

Thanks! please check your email to confirm your subscription.

By signing up you are agreeing to our terms & conditions and privacy policy. You can unsubscribe at any time.